The fact that quality companies can, on average, generate an excess return over the overall market has been proven many times in the literature. Over the last 30 years, companies with good returns on capital and low debt ratios have significantly outperformed companies with poor financial ratios. This is true for small caps as well as for large caps.
What our equity funds have in common is that quality companies are our top priority. Why quality pays off in the long run, which criteria we apply and how our process differs from common index providers are discussed in more detail in our current "Insight".
In particular, we shed light on the following questions:
Why invest in quality stocks?
- Distinct competitive advantages, solid balance sheets and structural growth drivers form the basis for sustainable growth with high returns on capital.
What does "quality" mean to us?
- When defining "quality companies", we take a holistic approach that includes both qualitative and quantitative factors.
Are there "unprofitable companies" in our portfolios?
- No, basically not, but it depends on the overall context. Negative earnings or free cash flow figures in the short term can create added value for us as shareholders in the long term and therefore justify an investment.
Matthias Born is the head of Berenberg's equity fund management since 2017 and is also Head of Investments at Germany's oldest private bank since 2019. He is responsible for the investment platform in the Wealth & Asset Management division and in his Equities role he built up a team of specialists for European and Global Equities, with strong expertise in the Small Caps segment. The growth-oriented equity funds Berenberg European Focus Fund and Berenberg Eurozone Focus Fund are under his leadership and have clearly outperformed the benchmark since their launch. He started his career in 2001 at Allianz Global Investors (AGI), where he managed portfolios for European small caps, European growth stocks and German equities from 2002 to 2017. He has grown two very successful equity franchises over the 16 years at AGI. Matthias Born has an excellent track record over almost two decades in these segments and has received several awards for his outstanding and consistent performance. He studied at the University of Wuerzburg and holds a degree in Business Administration.